A one-notch downgrade, he said, would lead to an $11 million rise in interest costs.

Interest costs are funded by rates. A $14 million increase in running costs equates to about a 1 per cent rates rise.

To create headroom, council officers have suggested drawing down $100 million over each of the next two years from a diversified investment portfolio, currently valued at $335 million, to manage the debt ratios.

So basically the Council is borrowing so much that they are on the verge of a credit downgrade which would increase interest rates and result in ratepayers paying an extra 1% (on top of the 9.9% average increase).

To avoid that, they don’t decide to borrow less, but instead to start liquidating assets.

dime

Surely Knott

As well as needing more transparency (eg a straightforward full spreadsheet by area with all opex and capex) We also need an Asset List by area. So that after each year we can see what assets our local board owns and how much our capex spend has increased our wealth and which assets have been sold off or gifted. Lots of the Capex spend in our area is highly questionable. And there’s lots of buying assets and then gifting assets or land to politically aligned community groups.

Captain Mainwaring

GTA

I find particularly interesting that the Government is enforcing lending limitations to commercial banks based on the applicants income, but no one says a thing when a local board cranks up a 7.5 bill debt.

It did not happen overnight, that was a great effort to waste our money.

As an Auckland ratepayer myself, I find it revolting. Especially after the broken promise about our rates not to mention other scandals.
I sense the seven lean years are coming as somebody has to pay back the debt. Ratepayers and motorists are ready to be milked again, eh?

This 300 million nest egg must be earning more than 3%, so selling it off will actually *cost* them money,

Ratings agencies will chalk the asset up as a positive, so it would actually be helping to reduce the risk of a downgrade,
liquidating the asset, will make the rest of the debt burden seem higher as their assets will have deminished…..

mikenmild

What Auckland should have is a team of Mayoral candidate and council candidates to put forward a package. There needs to be some combination of:
Cost cutting
Asset sales
Rates increases
Borrowing
over the next term to meet their objective.
Needless to say, no candidates will propose anything like that.

Adolf Fiinkensein

If the council is selling (the euphemism is drawing down) an asset to manage it’s debt ratios, it will need to apply all the proceeds to debt reduction or the ratios will remain largely unchanged. All they’re doing is transferring a current asset to cash. However, if the cash is used to reduce debt, then the debt level AND the asset value both decline, the former slightly more than the latter, giving a very minor change in the debt/asset ratio.

(The reason they want rate increases is driven by their need to preserve the ratio of debt to revenue. I’ll be interested to see how those who propose a ten percent reduction in rates will handle this.)

It’s all smoke and mirrors and the good lady is quite right to shine light on yet another piece of Len Brown bullshit.

When you “solve” a problem by creating a socialist organisation, this does open you to blame of some subsequent failings of that organisation. By spreading the socialisation of debt across as wide an area of Auckland as possible, in the manner of all good socialists, Rodney Hide created a “solution” to Auckland’s problems.

Now here we are, 6 years later and the great big socialist structure is haemorrhaging money.

Is socialism only a problem when Labour do it? Is it different when ACT do it?

holysheet

U-C you have highlighted the problem when you have every person able to vote.
If it was ratepayer only voting do you think this would be a socialist council.
The quicker someone gets the balls to repeal that fuckwit Palmers local govt legislation the better all local councils will be.

mikenmild

The comparison with Guy Fawkes is interesting.
Guy Fawkes went to Parliament to blow it up. Rodney Hide went to Parliament for the perks.
Guy Fawkes worked on a scheme to screw the royal family and Parliament. Rodney Hide worked on a scheme to screw Auckland ratepayer. Only Rodney Hide was successful.
Guy Fawkes is remembered 400 years later. Will anyone remember Rodney Hide in 2416?

Jack5

If the Auckland City Council were to go broke, the creditors could come after ratepayers. It’s surprising that the rating agencies warn of a credit downgrade when any receiver would have the power to bill Auckland ratepayers by a special rate. They probably wouldn’t let Penny off, either.

Dave Mann

I am not a socialist or a supporter of Len Brown by any means…. but isn’t it understandable that the costs of providing services and infrastructure to NZ’s fastest growing and most dynamic city should rise (and therefore the rates which theoretically pay for this expansion)? The city is GROWING, FFS!

Given this scenario, I don’t think a 2.4% rates increase is totally unreasonable…. and I certainly don’t think the answer is to sell off the city’s assets. It just doesn’t make any sense. BUT I think considerable savings could be made by closely examining WHICH areas of the council’s activities are CORE and NECESSARY, vs those that are unnecessary or just sheer wasteful.

For example: once upon a time a single rubbish truck used to come around and collect people’s rubbish which they put out in bins. The workers performing this task were employed directly by the council who told them what to do and they just got on and did it. Not now… Oh no… some outside profit-making contractor zooms around with twenty different trucks for twenty different kinds of waste/recycling bullshit and the poor citizen has to PAY for the fucking plastic bags as well on top of the rates bill which should have paid for it in the first place. To add another layer of stupidity, the bags now come in TWO different sizes!

The same goes for other ‘core’ services such as roading and maintenance and a whole host of other things that the council should be doing THEMSELVES as part of their duty to the ratepayer. Why, for example, should water be provided by a separate profit-driven company? And who on earth thought up the idea of calculating shower waste water versus shit and urine? Its just corporate welfare and I’m sure that all this quasi-corrupt bullshit just burns up money which could be put into providing SERVICES at a fraction of the cost.

Meanwhile, if you want to drop your ice cream wrapper into a bin in a public park or at a bus stop, you might as well just fart into the wind.

Everyone seems to think the previous seven councils were perfect; had no debt; and rates were staying stagnant. If only.

Two examples: First, in 2006, then mayor of North Shore City Council proposed a ten year plan which had rates doubling (yes, 100%) over that next ten years. His reasoning was “the city is growing and needs infrastructure spending”. He was a very good mayor – I just disagreed with him on this issue.

So nothing is new. The reason why it is more noticeable now is *because* of the amalgamation, not as a result of it. By that I mean people are now paying much more attention to local government matters in Auckland (as they should) and so it is highlighted much more. No one really cared under the old system, until mad mayors started urinating against trees or did other mad things. But with Auckland Council, the media is reporting on it more and more, but the problems are the same as they always have been.

Stars And Stripes

tom hunter

Then again, when something is utterly stupid, there might be no hidden meaning. So what you perceive as trolling or an attempt thereof could in fact be nothing more than a stellar example of oligophrenia in the ASCII form.

notrotsky

I heard “Phil In” on ZB this morning talking about the wharves – his immediate response was – consultants, investigations, the usual bullshit you hear when someone knows NOTHING! Labour people have a very bad habit of never doing any homework and it shows all over the shop.

John Palino phoned in – he actually had a plan of how to deconstruct the way the wharf is owned and run – (worked out for a period of 15 years) he really knows his stuff and obviously really loves the city. He has spent 3 years while we have been suffering working out the answers to turn Auckland into the city we deserve and have paid dearly for. If you get a chance check him out for yourselves.

Jim

@gump

Serious question – how do you propose to privatise assets that are costing you money to operate and maintain?

good question, although isn’t that the nature of just about every physical asset?

I also suspect that most of the councils operations are inefficient and wasteful (based upon all the council projects that I have seen/heard about from contractors). Typical in any large organisation but not at the level of fiscal irresponsibility that is tolerated there. It’s all OPM I guess.

“…but isn’t it understandable that the costs of providing services and infrastructure to NZ’s fastest growing and most dynamic city should rise (and therefore the rates which theoretically pay for this expansion)? The city is GROWING, FFS!”

Growing at its slowest rate in a generation, Auckland has a building rate so slow it is less than Australia.

It sure is turning out to be really expensive to slow the growth rate of Auckland to such an extent that the statement “fastest growing and most dynamic city” is highly debatable.

Guy Fawkes went to Parliament to blow it up. Rodney Hide went to Parliament for the perks.
Guy Fawkes worked on a scheme to screw the royal family and Parliament. Rodney Hide worked on a scheme to screw Auckland ratepayer. Only Rodney Hide was successful.